August 29 by Daniel Feichas Santos
The aviation manufacturing industry is a critical force that enables global trade and passenger transportation. The need to drive more efficient processes and higher satisfaction to their customers and passengers are requirements for long term success. As a result, manufacturers must constantly review current and invest in new technologies or risk losing their competitive advantage and negatively impacting their bottom line.
With more than 1,800 global customers in Commercial, Defence, Executive and Agricultural sectors and 5,600 planes in service, Embraer is third largest aircraft manufacturer in the world. Embraer takes pride in its 50+ years of history reinventing the business to find new products and solutions. It’s why we invest almost 10% of annual revenue in research, development, innovation, and improvement of industrial installations.
Embraer’s investments include the transformation of our Middle Office operations, specifically those related to the challenges of managing the complex aircraft configurations and contract processes that are part and parcel of the sales process. At Embraer, we saw the value of having an enterprise class Quote-to-Cash solution to help simplify and automate our complex aircraft composition, where each aircraft and the services offered to our customers is unique.
Common Pain Points in Aviation Manufacturing
Embraer’s previous ‘system’ for managing complex agreements across opportunity management, pricing, and quoting took days away from the team’s selling time because majority of the processes were manual and labour intensive. In addition, account executives didn’t have ready access to margin information and a lack of discount approval process lead to revenue leakage across the business. The company saw lost sales due to extended quoting and contracting cycles.
The nature of aircraft configuration and after sales services meant that the processes around document control, asset management, registrations, and warranties were disjointed and managed by multiple areas of the business in varying geographical locations across the globe. Even at a single location there was potential for a disconnect between the ‘Top Floor’ (sales and configuration departments) and the ‘Shop Floor’ (manufacturing, construction, and support).
Technical publications subscription is also a critical process for Embraer, as every customer needs to have a valid subscription to fly any of our aircraft. If a subscription (hard copy, paperless, or online) is not renewed on time, consequences include flight delays or even cancellation. The worst-case scenario is that a customer may seek compensation, which not only hurts our reputation but more importantly does not reflect the high-quality service or experience we want to offer our customers.
A Rising Challenge: The Move to the Subscription Economy
In the past, Embraer was mostly focused on commercial aviation, where many aircraft were shared across only a few customers. However, along with the rise in demand of executive jets in the past five years came the challenge of managing airline subscriptions and services, new business models the company had never faced before. For example, consider Embraer Executive Care (EEC), a comprehensive program designed to make aircraft maintenance simple with predictable costs for the owner and forecastable subscription revenues for Embraer. One of those models offers our customers a five-year contract where they can pay a fixed fee plus an additional fee per flight hour.
Offering this type of servicing model is extremely complex as Embraer must forecast almost all maintenance costs that may happen during those five years including: aircraft aging, region of operation, maintenance labour costs specific to that region, replacement parts shipping costs, etc. Any inaccuracies with this type of forecasting could impact five years of margin. With over 1,000 subscriptions per year and the same reduced team, we were desperate for some form of automation. We had been using Excel spreadsheets for this critical business process and we know that something had to change!
Solving Pain Points with a QTC Solution
Embraer chose the Apttus Quote-to-Cash (QTC) solution because it enabled the company to address internal processes within a single platform and on a single data model, enabling different parts of the business to simultaneously have visibility of critical processes.
Apttus QTC also addressed a number of other key challenges:
1) Manual Documentation and Contract Management: We automated these formerly manual processes, increasing our efficiency by reducing manual efforts and removing the need for paper-based contracts. This resulted in a 50% gain on configuring new contracts (for aircraft delivery).
2) Outdated Catalogues: We now have the ability to launch new aircraft models in new markets more rapidly and with greater accuracy. Up-to-date product catalogues are now built into our quoting systems, so we are managing our product offerings from a universal catalogue.
3) Lengthy Renewals Process: Our technical publications contracts are now automated via an Advice of Subscription Renewal (ASR), removing manual processes and streamlining the renewals. As a result, we have reduced our technical publication renewal subscription process by 90%.
4) Lack of Visibility and Approval Bottlenecks: Our sales teams now have the autonomy and ability to negotiate and tailor individual quotations for customers as they have increased visibility into margins and a streamlined approval process.
5) Inefficient Buying Experience: Most importantly, we deliver a better, more efficient buying experience for our customers as we are able to present customers with tailor-made offers based on account history and data. Additionally, we have an efficient online ordering capability with a fast, intuitive cart and checkout.
The Future for Apttus and Embraer
Since implementing a Quote-to-Cash solution Embraer has revolutionised how we handle all our Middle Office operations. Our ability to seamlessly manage this end-to-end process for a highly complex industry means that we have simplified our processes and drastically reduced our report generation, approvals, and renewals times.
To find out more about how Apttus’ Quote-to-Cash solutions for the Middle Office has helped Embraer, I will be presenting at the Salesforce Aerospace and Defence Summit on the 18th September 2019 at Salesforce Tower in London or contact Apttus directly.